The Cost of Insurance Premiums for the County's Cities

December 22, 1985

The Times in recent months has done a considerable disservice to its readers in publishing a continuing series of articles that all carry the same theme: "Our cities cannot afford their insurance premiums due to 'high jury awards and the doctrine known as deep pockets.' "

Typical of articles being printed by The Times are interviews with one city manager after another, all of whom are quoted by The Times as saying that "we are being charged exorbitant premiums and we have been told by our insurance carriers that the premiums are due to 'high jury awards and the doctrine known as deep pockets.' "

Typically what follows in the article is a listing of several injury claims pending against cities in which millions of dollars are being sought, the reporter apparently intending this as some sort of verification that indeed premiums must be going up because of the verdicts and deep-pockets doctrine.

Attorneys who handle suits for and against government agencies know, as do city managers, that in reality a suit against a city is not a way to obtain easy big dollars for injured victims.

If a major newspaper such as The Times can allow itself to be so easily manipulated by the insurance lobby, where does that leave the public? In your story (Dec. 10), the explanation that your reporter tried to contact the insurance company and was unsuccessful falls far short of his, and the rest of the Times' staff's, obligation to present a clear and accurate picture of this situation.

If it takes a challenge by the public to Times reporters to get them to dig into this situation and present the facts, then consider this letter such a challenge.

The insurance industry has been telling city managers that the premiums are going up due to big verdicts and the deep pockets doctrine. They tell home and car owners in brochures sent with notices of premium increases that the increase is due to large verdicts, and so the story continues with small business, medical offices and manufacturers. When, however, is the public going to be shown the figures that support this position?

If the insurance industry has nothing to hide--if the rate increases are not due to the fact that the individual insurance companies were able to earn high profits on investment income in the late 1970s and, therefore, kept premium rates at artificially low levels to try to gain as large a share of the market as possible and as a consequence have now found themselves in trouble from their own mismanagement when interest rates fell and investment income dropped off--then let them come forward with the figures, and let the public decide.

But let's not delay. If the private insurance industry is unwilling to open itself to inquiries from the press, it would be advisable for reporters to contact the state insurance commissioner. What has the commissioner done to assure California residents that the industry is not going unregulated and is not just raising premiums to recoup recent losses? We deserve better reporting than "he said that's what they said."


Santa Ana

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